Northern Trust Universe Data: Institutional Plans Post Solid Gains in Q4 to End Volatile 2022

After a volatile year, global markets ended the fourth quarter of 2022 with gains in both global equity and bond markets, driven by investor optimism that inflation was plateauing and monetary policy tightening would slow in 2023. The median return for institutional asset owners included in the Northern Trust All Funds Over $100 million plan universe was 4.9% for the quarter ending December 31, 2022, while the one-year median return was -12.7%.

The Northern Trust Universe tracks the performance of 368 large U.S. institutional investment plans, with a combined asset value of more than $1.17 trillion, who subscribe to performance measurement services as part of Northern Trust's asset servicing offerings.

“Institutional investors remained focused on inflation and interest rates during the fourth quarter of 2022, and although central banks continued to raise interest rates to fight inflation, there are signs that inflation and interest rate increases will decelerate in 2023,” said Amy Garrigues, global head of Investment Risk and Analytical Services at Northern Trust. “With hope that central bank interest rate hikes will be less frequent in 2023, investors started looking for opportunities to lock in higher yields, driving positive returns for the quarter.”

The Consumer Price Index year-over-year increase dropped to 7.1% in November 2022 from 9.0% in June 2022. Cooling inflation contributed to the Northern Trust U.S. Equity Program universe median gaining 8.1% during the quarter. The S&P 500 large cap index was up 7.6% during the three-month period.

The Northern Trust Corporate (ERISA) universe median return was up 4.4% for the fourth quarter. U.S. fixed income remains the largest asset class in ERISA plans, with a median allocation of 51.3%. The median allocation for U.S. equities was 20.8%.

The Northern Trust Public Funds universe median was 5.1% for the quarter. Allocations to U.S. and international equities increased due to the global equity market rally, with median allocations to U.S. and international equities increasing from 28.0% to 28.5% and from 11.7% to 13.0%, respectively. The median exposure to U.S. fixed income for public funds increased 0.4% to 22.9%.

The Northern Trust Foundation and Endowment (F&E) universe produced a 4.2% median return for the fourth quarter. The F&E median U.S. equity allocation remained at 18.3%, and the median allocation to private equity was 24.7% while the median allocation to U.S. fixed income continued to stay below 10%.

Results of U.S. plan level universes as of December 31, 2022:

About Northern Trust

Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has a global presence with offices in 25 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of December 31, 2022, Northern Trust had assets under custody/administration of US$13.6 trillion, and assets under management of US$1.2 trillion. For more than 130 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit us on northerntrust.com. Follow us on Twitter @NorthernTrust or Northern Trust Corporation on LinkedIn.

Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/terms-and-conditions.

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